Posts Tagged ‘income gap’

This weekend saw the Occupy Wall Street movement reach Japan, albeit in a more lowkey fashion (for the time being, at least). The income gap is widening in Japan, but because the rich are less prone to showing off their wealth and the media is polite and doesn’t draw attention to them (unless they ask for it), mostly what we know about this gap is at the lower end, with the ranks of the working poor growing by the day.

When it comes to the rich the main difference between Japan and America is that Japan, due to even shakier financial policies and the March 11 disaster, is becoming a riskier place for them to keep their money, and according to the weekly business magazine Diamond an increasing number are taking their assets, as well as themselves, overseas. The number one destination for such high-end economic refugees is Singapore, and not just among the Japanese rich. Chinese millionaires have voted for Singapore with their feet, too, for more obvious reasons. (Sixty percent of Chinese citizens with assets of at least 10 million yuan have applied or plan to apply for exit visas.)

There are three methods for rich people to gain permission to emigrate to Singapore: Be designated as a “retiree” with at least ¥1.2 billion in assets, of which ¥600 million is transferred to a Singapore-based bank account; establish a company in Singapore for ¥7 million and run it for at least 4 years; buy property in Singapore and apply for a resident visa. Some wealthy people may not find any of these methods possible or desirable, and right now Malaysia is moving in on Singapore as the destination of choice, because the conditions for residence are much simpler — and cheaper.

Some members of the Democratic Party in the United States, not to mention a good portion of the American people, are upset that President Barack Obama caved in to pressure from the Republicans to extend the Bush tax breaks for the wealthiest Americans. The issue speaks to one of the most contentious aspects of capitalism as it operates in a democracy: Are people who benefit the most from the democratic free enterprise system obligated to pay a larger share toward its maintenance?

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A corollary to this debate is how much of their wealth should citizens be allowed to pass on to their heirs. In a purely socialist system, ideally it would be zero, but many who don’t necessarily advocate socialist government often support heavy taxation of inheritances for ethical and moral reasons: Why should the child of a rich person have special advantages in life just because of birth? Other people (usually the rich) counter that in a laissez faire economic system, no one has a right to tell anyone else what they can or can’t do with their money.

The Japanese government is now thinking about raising the inheritance tax. As everyone knows the country is running out of money, and already the Democratic Party of Japan has cut the corporate tax, increased the amount of the child allowance, and put off any increase in the consumption tax indefinitely. Because the widening income gap is becoming more of a topic in the news, the DPJ probably feels the public will be receptive to a boost on taxes for richer people.